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Chevron Q3 Profit Down 33% On Lower Output, Oil Prices


Integrated energy company Chevron Corp. (CVX) on Friday reported a 33 percent decline in profit for the third quarter, reflecting lower production due to planned maintenance-related downtime, in addition to lower crude oil prices.

John Watson, chairman and CEO of Chevron said, "Crude oil prices were down and we had a heavy period of planned oil field maintenance which temporarily reduced oil and gas production in several locations. Foreign currency movements also hurt our results this quarter, while they benefited the year-ago period."

Chevron's upstream earnings declined 17 percent from the year-ago period to $5.14 billion, with decreases in both the U.S. and international operations amid lower crude oil price realizations.

Worldwide net oil-equivalent production for the quarter declined 3 percent from the prior-year period to 2.52 million barrels per day.

Chevron noted that production increases from project ramp-ups in Thailand, Nigeria and the U.S. were more than offset by the effects of planned maintenance-related downtime, normal field declines, continued shut-in of the Frade Field in Brazil, dispositions and storm-related shut-ins in the Gulf of Mexico.

The company's downstream earnings fell 65 percent from last year to $689 million, reflecting lower earnings at the company's U.S. and international operations.

Chevron's third-quarter net income was $5.25 billion or $2.69 per share, down from $7.83 billion or $3.92 per share in the prior-year period.

On average, 20 analysts polled by Thomson Reuters expected the company to earn $2.83 per share for the quarter. Analysts' estimates typically exclude one-time items.

Sales and other operating revenues for the quarter were $55.66 billion, down 9 percent from $61.26 billion last year.

Total revenues and other income declined 10 percent to $58.04 billion from $64.43 billion in the prior-year quarter and missed analysts' consensus revenue estimate of $64.09 billion.

Quarterly U.S. upstream earnings declined 26 percent from the year-ago period to $1.12 billion, due mainly to lower crude oil and natural gas realizations as well as lower production.

International upstream earnings decreased 14 percent to $4.02 billion, reflecting lower volumes as well as realizations for crude oil, in addition to higher exploration expense. These were partly offset by a nearly $600 million gain on sale of an equity interest in the Wheatstone Project, and lower tax items.

U.S. downstream operations earned $456 million, down 35 percent from last year. The decline was mainly due to lower margins on refined product sales and higher operating expenses.

International downstream operations fell 82 percent from last year to $233 million, reflecting lower gains on asset sales, including the absence of a 2011 gain of about $500 million from the sale of the Pembroke Refinery in the UK and Ireland.

Chevron purchased $1.25 billion of its common stock in the quarter under its share repurchase program.

Looking ahead to the fourth quarter, Chevron expects increased production compared to the preceding third quarter, reflecting the completion of planned turnarounds and restoration.

In Friday's regular session, CVX is trading at $110.42, down $1.04 or 0.93 percent on 219,678 shares.

by RTTNews Staff Writer

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